Retirees increasingly look to franchise opportunities for a second career, and it’s no surprise. Their grandparents might have spent a few years in retirement, caring for grandchildren or enjoying their declining years with friends. Their parents might have gone on cruises and had a decade of leisure. But the Baby Boomers are living longer, and often without pensions or substantial investments.
A franchise business gives retirees something valuable to do for their twenty or thirty years of retirement, and lessens the chances that they’ll outlive their retirement funds. But the earliest of the Baby Boomers are now nearing 70, so they’re beginning to retire from the franchises they opened as retirees. Over the next decades, this will become an increasingly common scenario.
Some franchisors are already preparing for the possibility. Here are some of the responses the franchisor community is seeing to this demographic shift:
- Some are making it easier for retirees to pass on their franchises to sons and daughters. Unlike traditional business owners, franchisees can’t automatically let their offspring step into their shoes and take over the business. Franchisors must approve family members just as they must approve any buyer of a franchise. However, as franchisors retire, this option is becoming more appealing.
- Some are working to make their offerings more appealing to younger people who want to invest in a solid existing franchise. In-house financing and special discounts are bringing younger people into established franchises whose owners want to retire. One common scenario is the case of the general manager who has the knowledge and skills to keep the business running, but not the capital to buy the franchise. Financing in this case is low-risk, and it’s a win-win for the franchisor and for the young business person.
- In some cases, serious discounts on up-front costs are a reward for strong sales within an existing franchise. Employees have the option of working their way into a franchisee position, with hard work taking the place of a cash investment. These arrangements might involve the current franchisee as a mentor for the up and coming young franchisee-to-be.
How can you benefit from this trend?
First, if you’re a young person with limited cash and plenty of energy, talk with franchisors to see whether they have or are planning programs like these. Some may be able to put you in touch with a suitable mentor within their franchises.
On the other hand, if you’re an older person and you don’t want to just lock up and walk away from your franchise when it’s time to retire, you could get involved with a program of this kind. While the details of these plans vary, they could provide a transition from active ownership through executive franchising to complete retirement.
If either option is appealing, you will be more successful if you plan ahead. If you’re planning to invest in a franchise business as a second career, you’ll need to put some effort into identifying and supporting a manager who will be able to take over the business successfully in the future, while a young person looking for such a position will need to invest some time up front to meet the requirements.
